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Traders look for lower opening

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Stock futures are indicating a lower open as we kick off a week where technology investors will have a close eye on networking giant Cisco Systems (NASDAQ:CSCO) $11.89, which leads this morning's rather light volume most active list (508,000 shares traded) and edging down $0.34 a share (-2.8%) $11.55, when it releases quarterly results after the bell on Tuesday.

Lehman Brothers told clients overnight that it is changing the way it recommends stocks. The changes mean its rating on Citigroup (NYSE:C) $30.88 and JP Morgan Chase (NYSE:JPM) $23.85 go to a middling "equal rating" in the new system from a strongest category "strong buy" under the old system.

Because the broker is also lowering earnings per share estimates for 2002 and 2003 at JPM and for 2002 at C, the changes were being interpreted by some in London as a ratings downgrade as well. Lehman said, "There continue to be a number of operational challenges at JPM, as well as those in the operating environment including legal and regulatory risk that dictate a cautious outlook."

In other action from analysts, CS First Boston downgraded Cox Communications (NYSE:COX) $25.02 to a "hold" from "strong buy," telling clients the downgrade is warranted "on concerns that high SG&A growth will continue to make margin expansion difficult... In essence, the cost of churn is hitting the P&L."

Dow component Procter & Gamble (NYSE:PG) $89.84 reported Q4 earnings this morning which beat estimates. The consumer products giant said net earnings, including charges, for the quarter were $910 million or $0.64 per share, compared with a net loss of $320 million, or $0.23, in last year's Q4.

Excluding charges , the company earned $0.77 a share in the April-June quarter, up from $0.63 in last year's comparable quarter. Analysts polled by Thomson Financial/First Call were looking for the company to report earnings per share of $0.75.

S&P futures currently trade lower by 4.8 points at 860.20. NASDAQ futures are down 6 points at 890 and Dow futures are lower by 35 at 8,265.

Fair value for the S&P 500 today is $0.70. That price will not change during the session. HL Camp & Company has their computers set for program buying at $1.49 and set for program selling at $-2.53. Fair value for the NASDAQ-100 today is $2.50.

Jeff Bailey
Senior Market Technician
Option Investor

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